Optimist LP Fund and Optimist Trust Fund, managed by BloombergSen Inc. on Carvana Co.
Thesis
Carvana’s retail units continued to grow at roughly 40% year over year, which Optimist views as unusually strong organic growth. A visit to the Cleveland reconditioning center reinforced the fund’s positive view of leadership quality below the C-suite and suggested that meaningful operating efficiency remains to be captured. With the stock down about 20% for the year and trading at roughly 13 times the fund’s estimate of 2027 EBITDA, Optimist views the valuation as a bargain and has been adding to the position.
“Second, the efficiency opportunity is far from exhausted; there is still meaningful margin left to capture in operations.”
Key risks
- Execution risk in capturing the remaining operational efficiency and margin opportunity
- A slowdown in retail-unit growth would weaken the valuation case